Obama's fuel economy rules a job killer, auto dealers say

October 3, 2011
By Jim Motavalli

Flying squads of auto dealers descended on Washington, D.C., in late September. Amped up by a rabble-rousing talk by House Speaker John Boehner and clutching copies of a dealers' association pamphlet entitled "A Flawed Fuel Economy Structure Produces a Flawed Result," about 500 dealers lobbied their elected representatives to do what they could to overturn the 54.5 mpg Corporate Average Fuel Economy (CAFE) standard for 2025 hammered out between automakers and the Obama administration.

On the surface, it didn't make much sense. As Dan Becker, director of the Safe Climate Campaign at the Center for Auto Safety, points out, the automakers agreed to the 54.5 rule, and signed letters of commitment not to try and overturn them through legislation or litigation.

But the National Automobile Dealers Association (NADA), which declined to speak on the record for this story (other than to confirm that the dealers were in town) goes its own way on this issue.

In the first quarter of 2011, the association spent $605,000 on lobbying the federal government on fuel economy standards (and other issues), the Associated Press reports. In April, the U.S. Court of Appeals finally rejected NADA's lawsuit (brought with the U.S. Chamber of Commerce) to try and overturn California's right to set separate fuel economy standards.

What automakers want, says Gloria Bergquist, a vice president of the Alliance of Automobile Manufacturers, is "a single national program for fuel economy and carbon dioxide to avoid a patchwork of regulations." And that's exactly what they got with the 2017-2025 federal rules, because it folds in California and creates one uniform rule for all 50 states. But despite the automakers winning some significant concessions in the 54.5 rule (including a big SUV exemption), the auto dealers - who see an unholy alliance between California's regulations and the greens at the EPA - aren't happy. Hence the lobbyists.

NADA's goal is passage of an amendment that would prohibit the EPA and California's Air Resources Board from being involved in writing 2017-2025 regulations, leaving the task solely to what they consider to be a more industry-friendly National Highway Traffic Safety Administration (NHTSA). Just such an amendment, proposed by U.S. Rep. Steve Austria (R-Ohio) passed the House attached to an appropriations bill, but that's as far as it went.

"Unless NHTSA is the sole fuel economy regulator, jobs will needlessly be at risk," says NADA. The group puts the number of jobs at risk at 200,000, and says that the cost of a new vehicle would increase $3,000 by 2025. NADA spokesman Bailey Wood calls that "a softball estimate." He thinks it could go up as much as $10,000, citing a Center for Automotive Research (CAR) estimate. That's in addition, of course, to the $150 billion industry cost to comply with what Wood calls "the most expensive auto rule in history."

Becker, who was personally ejected from Boehner's NADA talk by Wood, is scoffing. "This is a political ploy," Becker says. "Obama stood up with 11 auto company CEOs and said this is what we can achieve on reducing global warming if we cooperate, and the Republicans can't stand it. They want an amendment that would put the standards on ice for a year or two until, presumably, a Republican president comes in and permanently kills them. It's not hard getting such an amendment through the House - in the current climate, they'd pass a law repealing the first law of thermodynamics - but getting it through the Senate and enacted into law is a much bigger hurdle." The Senate is likely to defeat such an amendment, and even if it sailed through there it would face a certain Obama veto.

The auto industry isn't actively supporting NADA's lobbying - Bergquist says it's focused on negotiating last-minute details of the CAFE standard - but it's at least sympathetic. Bergquist said in an email, "We understand that dealers are on the front line of the marketplace and are concerned about future sales, especially of advanced technology vehicles needed to achieve these higher standards. There is some reason for concern. Last year there were 30 models of hybrids on sale, and there combined sales were only 2.4 percent of total sales."

There's no shortage of refutation for NADA's position. The Union of Concerned Scientists says that the CAR job loss statistics cited by NADA are rife with "misused data" with "basic technical and mathematical errors." UCS says that that a 2025 car meeting the federal standards would "provide savings of about $7,500 over its lifetime compared with today's vehicles." And the standards will cut U.S. oil consumption by 2.5 million barrels daily by 2030. And avoid 3.3 billion metric tons of greenhouse gas emissions between 2017 and 2025.

CERES, a national coalition of institutional investors and public interest groups, claims that CAFE will create 484,000 new jobs, including 48,000 in the retail trade sector that presumably includes auto dealers, by 2030. And Roland Hwang of the Natural Resources Defense Council says that "NADA has nada" in claiming that CAFE is a job killer opposed by business interests.

Hwang cites a new poll released by the Small Business Majority advocacy group that found 80 percent of 1,257 small business owners surveyed supporting a 60 mpg 2025 standard - higher than the one actually on the books.

I talked to John Arensmeyer, the founder and CEO of Small Business Majority, and he told me that owners are more worried about the cost of doing business than about regulation or taxes. Stronger fuel economy rules mean lower costs for operating vehicle fleets, he said. The poll found the owners asking why auto companies aren't being pushed to innovate more. The CAFE process does push innovation, because it simply gives the automakers a target, without saying how they have to get there. It's not specifically an electric car mandate, and in fact Ford and other carmakers will meet it in part with new eco-smart three- and four-cylinder engines.

The Austria amendment, and others like it, will be back. There will be determined efforts to spike the CAFE process. From where I sit now they're not going to succeed, but the effectiveness 500 home-state auto dealers unleashed on Congress is not to be sneezed at.

Starting in 2012, U.S. cars and trucks will have stricter fuel emissions standards -- up to 39 miles per gallon for cars and 30 mpg for trucks by 2016 -- under a proposed new standard President Barack Obama plans to announce ...

On the theory that a driver who knows when a red light will turn green is more relaxed and aware, vehicle manufacturer Audi is unveiling this week in Las Vegas a technology that enables vehicles to "read" traffic signals ...

"Hundreds of sick fuckheads who love to torture and kill small animals could be out of a job thanks to this Nazi Liberal Democratic Communist Alien President, his insanity is hurting the economy and causing important people to suffer"

Why are these articles alongside articles saying it's the end of the world and we could be facing the end of most macroscopic multi-cellular life on earth thanks to mankind's scientific "progress"

Seriously, the economy needs to die. People need to be self sufficient, we have had plenty of time and warning before now that our lifestyles are unsustainable, which means now people are going to starve and die. They already are starving and dieing in other countries but the USA is about to lose it's angelic buffer and shit will hit a very big fan.

It would be very harmfull to the developement of higher MPG vehicles if the California Air Rsources Board (CARB) were to be involved at the national level because its judgement is swayed by politics and lobbyist, for example commercial trucks in california are required to have filter device that actualy burns diesel inside of it and increases feul comsumtion and CO2 emmissions. CARB will not allow after market devices on cars that would inprove feul economy and many cars are prematurly scraped adding to the toxic waste problem because of the insane smog standards of the CARB.

Un, no. Those standards are not "insane". Due to its hot and dry climate, CA has real problems with smog, particularly in the inland valleys, and has to balance the health of the people against the profits of industry.

^^ that is to say, if CA didn't quite so irrationally build its economy, residential and industrial developments, and transportation systems around cars, then perhaps it wouldn't need such strict vehicle emissions standards in the first place since there'd be fewer cars on the road. But, somehow I doubt the notion of the nation's most car-crazy state and biggest car market turning away from cars, would go over real well with the car and dealer industry. Seems they want to have their cake, and eat it too.

Due to its hot and dry climate, CA has real problems with smog, particularly in the inland valleys

Hot and dry has nothing to do with it. Cities in valleys and high pressure systems do.

Hot and dry climate is conducive to high pressure systems forming and persisting throughout the year, and especially in the summer. As for valleys, while some smog-prone cities (like LA) are ensconced in relatively tight valleys, others (like Sacramento)are in the midst of the expansive Central Valley, which is so wide and flat you'd hardly realize it was in fact a valley without checking an atlas.

Just for reference, in spite of all the "crazy" CARB regulations, we still have this situation as of 2007:

Due to its hot and dry climate, CA has real problems with smog, particularly in the inland valleys

Hot and dry has nothing to do with it. Cities in valleys and high pressure systems do.

While your comment is 'more valid' to what creates the conditions, the main point here is that you wouldn't have smog in CA cities if there were no pollutants, NOX, etc.

I don't understand why the dealers are the only player in the industry that are actually protesting this. And also, I don't see what their line of logic is for lost jobs. The only thing I can think of is that this will make midsize vehicles more expensive, and erode their margins there. Small, cheap, vehicles will be relatively unnaffected as they will easily meet the targets by then (And almost meet it now)

If gas goes to 6 or 10 a gallon in 15 years, we'll be thankful we were prepared.

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